Uber Strikes Taxi Partnership in Thailand, Seventh Deal in Asia

BANGKOK — “Keep your friends close and your enemies closer” seems to be Uber Technologies’ strategy in Thailand. The taxi app company announced Wednesday that it would launch its ride-hailing service in Thailand by collaborating with regulated taxis, whose drivers were once derided by its cofounder.

Uber will partner with Howa, a major local taxi operator known for its green cars, and bring the company’s 4,000 taxis that operate in Bangkok onto its ride-sharing app platform.

Starting from Dec. 19, riders will be able to book a Howa taxi through the Uber app by paying a surcharge. Howa’s drivers, meanwhile, can connect with customers more efficiently using the app.

“Uber is a globally operating app provider and has a customer base around the world,” said Hudsadin Eamsherangkul, Howa assistant managing director. “Those are the potential customers for our drivers.”

Thailand is the seventh market in Asia for Uber to strike a taxi partnership following countries such as Indonesia, Malaysia, Myanmar and Cambodia.

Last week, it announced an agreement in Singapore for a joint venture with ComfortDelGro, the city-state’s largest taxi operator with 60% market share. Subject to regulatory approval, ComfortDelGro will buy a 51% stake in Uber’s wholly owned car rental subsidiary Lion City Holdings and acquire 12,450 cars of Lion City’s total fleet of 14,000.

The deal would also allow ComfortDelGro’s taxi drivers to receive ride requests on the Uber app. With the fleet expansion, both companies expect increased demand for both private hire and taxi drivers from consumers.

Pivotal

“Although [each country] take different forms, the end of the story is just an absolute partnership and collaboration with taxi companies in the market,” said Brooks Entwistle, Uber chief business officer for Asia Pacific.

Entwistle, a former Goldman Sachs partner who joined Uber in August to head operations in the region, said that the company is softening its stance against regulators and is now focusing more on working together with governments within local regulations.

Uber entered Asia in 2013 from Singapore. It currently operates in 18 countries or more than 100 cities. While the company’s ridesharing service using private cars have brought new options for consumers, it is still unregulated in many countries and has been in conflict with conventional taxi services and regulators across the region. In Thailand, talks to make its ridesharing service using private cars legal are still ongoing.

The company’s cofounder and outspoken former Chief Executive Travis Kalanick had gone as far as describing Uber’s service as a “political war” between regulated taxis. He stepped down in June following allegations of personal wrongdoing and a pervasive culture of sexual harrassment at the company.

But from this year, the company’s strategy would be to focus on working with regulators to solve transportation issues using “existing transportation infrastructure,” Entwistle said. For example, the strictly regulated Japanese market where Uber is hoping to bring its ridesharing app soon will be “absolutely focused on having a partner with taxi companies,” he said.

“There is a pivot…and that is a global pivot that we are spending a lot of time on,” he said, stressing that Asia is “so important” from a growth standpoint.

According to Google and Singapore’s Temasek Holdings, the on-demand taxi service in Southeast Asia is estimated to hit $13 billion by 2025, growing 18% per year. The number of monthly riders could reach 29 million by then, up from 7.3 million in 2015.

Competition with Grab

But at the same time, competition is heating up. In the years that Uber was focused on its ride sharing service using private cars, competitors such as Singapore’s Grab have invested resources and won strong backing in the taxi-hailing app business.

Grab is backed by investors including China Investment Corp., Singapore’s Temasek and China’s Didi Chuxing and has been aggressively working toward gaining market share not just in its home market, but the entire Southeast Asian region.

In March, it worked with five other taxi operators in Singapore to roll out JustGrab, a fixed-fare service subject to dynamic pricing to make it more price competitive. In August, it announced plans to invest $100 million in Myanmar over the next three years to boost ride hailing services. In October, Grab announced that it has obtained $700 million worth of debt facilities to expand its fleet of rental cars in the region.

Grab’s efforts seem to have paid off. ComfortDelGro’s third quarter financial results ended September showed that it was feeling the heat from increased competition from ride hailing apps such as Grab, with third-quarter taxi revenue falling by 11% to 298.3 million Singapore dollars ($219.5 million) on the year.

In September, local media reports said that more than 2,000 ComfortDelGro drivers had signed up for a Grab driver account under a recruitment drive by Grab. They said ComfortDelGro could lose more than 3,000 hirers to rival taxi companies that use Grab’s booking system.

The intensifying competition has caused ComfortDelGro’s taxi fleet in Singapore to shrink by 7.5% from earlier this year to around 15,400 at end-July.

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